U.S. economic data has improved significantly in recent months,
which is impressive considering the new payroll tax cuts,
sequestration federal budget cuts, and uncertainty about what
Washington may or may not cut next.

Last month's
personal income and spending report revealed that the
resilience in personal consumption was largely due to a drop in
the personal savings rate (i.e. people spent more than they
earned).

But investors wondering about the outlook going forward for the
US economy will want to watch one economic number in particular:
February’s personal income figure, which is scheduled for
release on March 29th.

Why is this number so important? While consumer resilience to the
tax increase can partly be attributed to a stronger labor market,
lower savings and low interest rates have also cushioned
consumption. For instance, the US personal savings rate has been
heading lower for most of the past four years and it plunged to
2.4% in January, the lowest level since late 2007.

In other words, if consumption and the broader economy are to
remain resilient going forward in the face of
consumer deleveraging, they will need to be supported by an
improving labor market leading to faster personal income growth.

Koesterich warned that if we don't see a pickup in personal
income, then the economy could hit a speed bump in the second
quarter.